"The H5N1 bird flu virus type A has been registered" at the farm in the village of Razdolnoye in Krasnodar region, it said in a statement.
A total of 400 chickens have died at the farm and 414 have been put down, the service said, adding that a quarantine had been imposed.
A spokesman for the veterinary service told AFP it was "unlikely" that the chicken meat had reached local markets as preventive measures were taken "very quickly" after the virus was suspected.
The highly pathogenic strain of the H5N1 virus detected at Razdolnoye is potentially dangerous for humans. Experts have warned that the virus could mutate into a strain that can be transmitted between humans.